Question 1

Other things held constant, an increase in depreciation will cause the capital stock to

Accepted Answer

A)  decrease. 
B)  grow at a slower pace. 
C)  remain unchanged. 
D)  become unprofitable. 
A)  decrease. 
B)  grow at a slower pace. 
C)  remain unchanged. 
D)  become unprofitable.

Question 2

Reference: Ref 8-1 (Table: GDP Growth) The table shows growth rates for Germany, Japan, and the United States in both the post-WWII periods of 1950-1960 and 1980-1990. Which reason best explains why growth rates in Germany and Japan began to approach U.S. growth rates during the 1980-1990 period?

Accepted Answer

A)  MPK began to slow down. 
B)  Depreciation began to slow down. 
C)  The institutions for economic growth began to diminish. 
D)  All of the answers are correct. 
A)  MPK began to slow down. 
B)  Depreciation began to slow down. 
C)  The institutions for economic growth began to diminish. 
D)  All of the answers are correct.

Question 3

In a small country each labor hour has capital stock equal to 900 units. This year it produced 20 units of new capital goods, with a depreciation rate of 10 percent, and a production function of . If there is no technological advancement,   what will the growth rate in this country be over the next year?

Accepted Answer

A)  -3.96 percent 
B)  10 percent 
C)  2.4 percent 
D)  -4.13 percent 
A)  -3.96 percent 
B)  10 percent 
C)  2.4 percent 
D)  -4.13 percent

Question 4

Which of the following is NOT a governmental program that would encourage technological advancement?

Accepted Answer

A)  requiring banks to offer no-money-down incentives for loans to buy homes 
B)  creation and enforcement of patent and copyright laws 
C)  providing loans to people to obtain higher education in the basic sciences 
D)  providing a tax credit for businesses that conduct research and development 
A)  requiring banks to offer no-money-down incentives for loans to buy homes 
B)  creation and enforcement of patent and copyright laws 
C)  providing loans to people to obtain higher education in the basic sciences 
D)  providing a tax credit for businesses that conduct research and development

Question 5

According to the Solow model, a country will grow faster when its capital stock is

Accepted Answer

A)  at the steady-state value. 
B)  above the steady-state value. 
C)  just below the steady-state value. 
D)  far below the steady-state value. 
A)  at the steady-state value. 
B)  above the steady-state value. 
C)  just below the steady-state value. 
D)  far below the steady-state value.

Question 6

South Korea's high investment rate of 35 percent in the 1990s helped ensure that _______ would be higher, even though its ________ slowed.

Accepted Answer

A)  population; education rate 
B)  GDP; growth rate 
C)  growth rate; GDP 
D)  growth rate; savings rate 
A)  population; education rate 
B)  GDP; growth rate 
C)  growth rate; GDP 
D)  growth rate; savings rate

Question 7

Explain why entrepreneurs are often viewed as job destroyers.
B. Entrepreneurs tend to develop new and better ways of doing things including the production of existing products. When these new and better ways to produce products replace people with machines, they lead to decreases in employment.

Accepted Answer

B. Entrepreneurs tend to develop new and

Question 8

Assuming you don't want to die, why is it better to have a common disease than a rare disease?

Accepted Answer

The more common the disease, the larger

Question 9

Reference: Ref 8-1 (Table: GDP Growth) The table shows growth rates for Germany, Japan, and the United States in both the post-WWII period from 1950-1960 and then again from 1980-1990. Which of the following explains why Germany and Japan experienced such high growth rates just after the Second World War?

Accepted Answer

A)  Trade agreements between Germany and Japan greatly enhanced economic growth. 
B)  High MPK levels contributed to significant per capita output growth. 
C)  Their technological advances at this time were higher than those of the United States. 
D)  All of the answers are correct. 
A)  Trade agreements between Germany and Japan greatly enhanced economic growth. 
B)  High MPK levels contributed to significant per capita output growth. 
C)  Their technological advances at this time were higher than those of the United States. 
D)  All of the answers are correct.

Question 10

Accepted Answer

The student needs to look for two things

Question 11

Human capital is similar to physical capital in that it

Accepted Answer

A)  is dependent on government investment. 
B)  decreases the growth rate. 
C)  does not depreciate. 
D)  has diminishing returns. 
A)  is dependent on government investment. 
B)  decreases the growth rate. 
C)  does not depreciate. 
D)  has diminishing returns.

Question 12

The concept of a spillover can be defined as I. the use of non-rivalrous ideas. II. the fact that even with patents, ideas tend to spillover and benefit other firms and consumers. III. an excess supply of good ideas.

Accepted Answer

A)  I only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III 
A)  I only 
B)  I and II only 
C)  II and III only 
D)  I, II, and III

Question 13

(Figure: Increased Production) Figure: Increased Production   Refer to the figure above. Which of the following factors could cause the upward shift of the production function from Y to Y'?

Accepted Answer

A)  foreign direct investment 
B)  technological advancement 
C)  increase in the capital stock 
D)  an aging labor force 
A)  foreign direct investment 
B)  technological advancement 
C)  increase in the capital stock 
D)  an aging labor force

Question 14

The marginal product of capital I. refers to the cost of purchasing one extra unit of capital. II. is expected to be higher for very poor countries relative to wealthy countries. III. increases as capital accumulation occurs.

Accepted Answer

A)  I only 
B)  II only 
C)  II and III only 
D)  III only 
A)  I only 
B)  II only 
C)  II and III only 
D)  III only

Question 15

Consider the following production function: . Which of the following is true about this production function?

Accepted Answer

A)  More capital induces growth but at a decreasing rate. 
B)  As capital accumulation occurs, the marginal product of capital falls. 
C)  The iron logic of diminishing returns holds true with this production function. 
D)  Each of these statements describes an aspect of the given production function. 
A)  More capital induces growth but at a decreasing rate. 
B)  As capital accumulation occurs, the marginal product of capital falls. 
C)  The iron logic of diminishing returns holds true with this production function. 
D)  Each of these statements describes an aspect of the given production function.

Question 16

Profit seeking tends to lead to ideas that

Accepted Answer

A)  increase output for individual firms. 
B)  increase output for individual industries. 
C)  increase output for the U.S. economy. 
D)  Each of these answers is correct. 
A)  increase output for individual firms. 
B)  increase output for individual industries. 
C)  increase output for the U.S. economy. 
D)  Each of these answers is correct.

Question 17

The economics of ideas

Accepted Answer

A)  refers to cutting edge growth. 
B)  helps explain why countries like the United States have been growing for the past two centuries. 
C)  explains why the simple Solow growth model ly predicts no long-run economic growth. 
D)  All of these answers are correct. 
A)  refers to cutting edge growth. 
B)  helps explain why countries like the United States have been growing for the past two centuries. 
C)  explains why the simple Solow growth model ly predicts no long-run economic growth. 
D)  All of these answers are correct.

Question 18

______ grants temporary monopoly rights, typically for 20 years from its filing date.

Accepted Answer

A)  A patent 
B)  A development loan 
C)  A document of invention 
D)  An initial product offering 
A)  A patent 
B)  A development loan 
C)  A document of invention 
D)  An initial product offering

Question 19

An economy has a steady-state output level of 9. The economy's labor, technology, and education levels are constant, and the economy is described by the production function:   Depreciation is described by the linear function D = 0.06K. What is the steady-state level of capital stock and what is the level of investment needed to maintain it?

Accepted Answer

The economy is at the steady state. Ther

Question 20

You create a video to audition for film school. It ends up being viewed by over 500,000 people. What are the additional people enjoying?

Accepted Answer

A)  a consumable leisure good 
B)  the effect of maximizing trade 
C)  the effect of conditional convergence 
D)  the effect of a spillover good 
A)  a consumable leisure good 
B)  the effect of maximizing trade 
C)  the effect of conditional convergence 
D)  the effect of a spillover good

Exam 26: Gdp and the Measurement of Progress

Other things held constant, an increase in depreciation will cause the capital stock to

Reference: Ref 8-1 (Table: GDP Growth) The table shows growth rates for Germany, Japan, and the United States in both the post-WWII periods of 1950-1960 and 1980-1990. Which reason best explains why growth rates in Germany and Japan began to approach U.S. growth rates during the 1980-1990 period?

Which of the following is NOT a governmental program that would encourage technological advancement?

According to the Solow model, a country will grow faster when its capital stock is

South Korea's high investment rate of 35 percent in the 1990s helped ensure that _______ would be higher, even though its ________ slowed.

Explain why entrepreneurs are often viewed as job destroyers. B. Entrepreneurs tend to develop new and better ways of doing things including the production of existing products. When these new and better ways to produce products replace people with machines, they lead to decreases in employment.

Assuming you don't want to die, why is it better to have a common disease than a rare disease?

Human capital is similar to physical capital in that it

The concept of a spillover can be defined as I. the use of non-rivalrous ideas. II. the fact that even with patents, ideas tend to spillover and benefit other firms and consumers. III. an excess supply of good ideas.

(Figure: Increased Production) Figure: Increased Production Refer to the figure above. Which of the following factors could cause the upward shift of the production function from Y to Y'?

The marginal product of capital I. refers to the cost of purchasing one extra unit of capital. II. is expected to be higher for very poor countries relative to wealthy countries. III. increases as capital accumulation occurs.

Consider the following production function: . Which of the following is true about this production function?

Profit seeking tends to lead to ideas that

The economics of ideas

______ grants temporary monopoly rights, typically for 20 years from its filing date.

You create a video to audition for film school. It ends up being viewed by over 500,000 people. What are the additional people enjoying?

The Big Ideas in Economics

The Power of Trade and Comparative Advantage

Business Fluctuations: Aggregate Demand and Supply

Equilibrium: How Supply and Demand Determine Prices

Elasticity and Its Applications

Taxes and Subsidies

The Price System: Signals, Speculation, and Prediction

Price Ceilings and Floors

International Trade

Externalities: When the Price Is Not Right

Costs and Profit Maximization Under Competition

Competition and the Invisible Hand

Monopoly

Price Discrimination and Pricing Strategy

Oligopoly and Game Theory

Competing for Monopoly: the Economics of Network Goods

Monopolistic Competition and Advertising

Labor Markets

Public Goods and the Tragedy of the Commons

Political Economy and Public Choice

Economics, Ethics, and Public Policy

Managing Incentives

Stock Markets and Personal Finance

Asymmetric Information: Moral Hazard and Adverse Selection

Consumer Choice

The Wealth of Nations and Economic Growth

Growth, Capital Accumulation, and the Economics of Ideas: Catching up Vs the Cutting Edge

Saving, Investment, and the Financial System

Supply and Demand

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Transmission and Amplification Mechanisms

The Federal Reserve System and Open Market Operations

Monetary Policy

The Federal Budget: Taxes and Spending

Filters

South Korea's high investment rate of 35 percent in the 1990s helped ensure that _ would be higher, even though its __ slowed.